Listing of quality companies important to China's stock market: regulator

The listing of high quality companies on domestic stock exchanges is important to the healthy development of China's stock market, Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), has said.

The increasing number of high quality Chinese firms being listed on overseas bourses in recent years has prevented domestic investors from sharing the benefits of China's economic growth, while seriously dampening the development of domestic financial market, he was quoted as saying by Tuesday's China Securities Journal.

The situation has improved in recent months, with more big Chinese firms originally listed on overseas markets returning home. The Bank of China is the latest example.

The Industrial and Commercial Bank of China (ICBC), the country's largest commercial bank, is simultaneously offering A shares to be listed on the Shanghai Stock Exchange and H shares to be listed on the Hong Kong bourse. It is the first major Chinese company to do so.

The listing of quality companies could also reduce the risk of a stock market bubble as a result of a liquidity surplus in the market, Shang said.

He pointed out that by the end of June, Chinese banks had a yuan deposit balance of 31.8 trillion yuan (4 trillion U.S. dollars) and a yuan loan balance of 21.5 trillion yuan. The difference of 10.3 trillion yuan meant banks have to find appropriate investment for their money.

The top regulator said the shareholding reform that turned non-tradable shares owned by the state in the majority of China's listed companies into ordinary tradable shares has also bolstered investor confidence.

The dominance of non-tradable shares in most listed companies has made it impossible for public investors to exercise any meaningful influence on their operation, and is believed to be a major factor in the disappointing performance of China's stock market in recent years despite the dynamic national economy.

Growing investor confidence in the market has been indicated by the fact that the market has retained a growth tendency in the last few months, despite the listing of 21 new stocks and the issue of new shares by listed companies raising more than 87.61 billion yuan, he said.

Source: Xinhua